TORONTO _ The loonie was up nearly three-quarters of a U.S. cent following a Wall Street Journal report that says President-elect Donald Trump thinks the U.S. dollar is “too strong.”
As North American stock markets were opening this morning, the Canadian dollar was worth nearly 76.67 cents US _ up seven-tenths of a cent from Monday.
The value of the U.S. dollar is important for Canada and other trading partners of the United States.
Trump’s comments about the U.S. dollar were published late Monday in a story on the Journal’s website about the president-elect’s criticism of a Republican alternative to his proposal for import tariffs.
Trump said he thought the U.S. dollar was already too strong because China _ which has the world’s second-biggest economy after the United States _ holds down its currency.
“Our companies can’t compete with them now because our currency is too strong. And it’s killing us,” he told the Journal.
A commentary Tuesday by Scotiabank’s foreign exchange team said it wasn’t clear whether Trump was saying the U.S. dollar was too high specifically against China’s yuan or currencies in general, but investors reacted anyway.
“Volatility inducing comments from the incoming president may be something we have to get used to but his first verbal foray into the FX (foreign exchange) space could severely undermine the USD’s perceived strength going forward, we fear,” the note said.
On Monday, while U.S. stock markets were closed for the Martin Luther King Jr. holiday, officials at the International Monetary Fund said its forecast for global economic growth have been complicated by uncertainty over U.S. policies.
However, the IMF did lower its estimate for Mexico’s growth in 2017 and 2018 by 0.6 of a percentage point because markets “seem to be concerned about the uncertainty related to the future course of U.S. trade policy.”